Instructions For Form 1120-Pc - 2009 (Page 4 of 21) in pdf

If the corporation owes tax when it

Foreign insurance companies, see

the corporation’s books and records. In all

files Form 1120-PC, do not

Notice 90-13, 1990-1 C.B. 321,

cases, the method used must clearly

include the payment with the tax

before computing estimated tax.

show taxable income. Permissible

CAUTION

return. Instead, mail or deliver the

methods include cash, accrual, or any

payment with Form 8109 to an authorized

Interest and Penalties

other method authorized by the Internal

depositary, or use EFTPS, if applicable.

Revenue Code.

Interest. Interest is charged on taxes

For more information on deposits, see

The gross amounts of underwriting

paid late even if an extension of time to

the instructions for Form 8109 and Pub.

and investment income should be

file is granted. Interest is also charged on

15 (Circular E), Employer’s Tax Guide.

computed on the basis of the Statement

penalties imposed for failure to file,

of Income of the NAIC annual statement

negligence, fraud, substantial valuation

Estimated Tax Payments

to the extent not inconsistent with the

misstatements, substantial

Internal Revenue Code and its

understatements of tax, and reportable

Generally, the following rules apply to the

Regulations. In all cases, the method

transaction understatements from the due

corporation’s payments of estimated tax.

used must clearly show taxable income.

•

date (including extensions) to the date of

The corporation must make installment

payment. The interest charge is figured at

Change in accounting method.

payments of estimated tax if it expects its

a rate determined under section 6621.

Generally, the corporation must get IRS

total tax for the year (less applicable

credits) to be $500 or more.

consent to change the method of

Late filing of return. A corporation that

•

The installments are due by the 15th

accounting used to report taxable income

does not file its tax return by the due date,

day of the 4th, 6th, 9th, and 12th months

(for income as a whole or for the

including extensions, may be penalized

of the tax year. If any date falls on a

treatment of any material item). To do so,

5% of the unpaid tax for each month or

Saturday, Sunday, or legal holiday, the

the corporation generally must file Form

part of a month the return is late, up to a

installment is due on the next regular

3115, Application for Change in

maximum of 25% of the unpaid tax. The

business day.

Accounting Method.

minimum penalty for a return that is over

•

Use Form 1120-W, Estimated Tax for

60 days late is the smaller of the tax due

See Form 3115, the Instructions for

Corporations, as a worksheet to compute

or $135. The penalty will not be imposed

Form 3115, and Pub. 538, Accounting

estimated tax.

if the corporation can show that the failure

Periods and Methods, for more

•

If the corporation does not use EFTPS,

to file on time was due to reasonable

information on accounting methods.

use the deposit coupons (Forms 8109) to

cause. Corporations that file late should

There are some instances when the

make deposits of estimated tax. See the

attach a statement explaining the

corporation can obtain automatic consent

instructions for Form 8109 for information

reasonable cause.

from the IRS to change to certain

on completing the coupon.

Late payment of tax. A corporation that

•

accounting methods. See Rev. Proc.

If the corporation overpaid estimated

does not pay the tax when due generally

2008-52, 2008-36 I.R.B. 587, and Rev.

tax, it may be able to get a quick refund

may be penalized

of 1% of the unpaid

Proc. 2009-39, 2009-38 I.R.B. 371. Also,

by filing Form 4466, Corporation

tax for each month or part of a month the

see the Instructions for Form 3115.

Application for Quick Refund of

tax is not paid, up to a maximum of 25%

Overpayment of Estimated Tax. See the

of the unpaid tax. The penalty will not be

Safe harbor method of accounting for

instructions for Form 8109 for details on

imposed if the corporation can show that

premium acquisition expenses.

how to complete the coupon for estimated

Insurance companies subject to tax under

the failure to pay on time was due to

tax deposits.

section 831 are provided with a safe

reasonable cause.

harbor method of accounting for premium

See the instructions for lines 14c and

Trust fund recovery penalty. This

acquisition expenses. Form 3115 must be

14e, Form 1120-PC.

penalty may apply if certain excise,

filed in order to change to the safe harbor

income, social security, and Medicare

Estimated tax penalty. A corporation

method. For more information, see the

taxes that must be collected or withheld

that does not make estimated tax

Instructions for Form 3115 and item 67 in

are not collected or withheld, or these

payments when due may be subject to an

the List of Automatic Accounting Method

taxes are not paid. These taxes are

underpayment penalty for the period of

Changes.

generally reported on:

underpayment. Generally, a corporation is

•

Form 720, Quarterly Federal Excise

subject to the penalty if its tax liability is

Accounting Period

Tax Return;

$500 or more and it did not timely pay the

•

Form 941, Employer’s QUARTERLY

An insurance company must figure its

smaller of:

•

Federal Tax Return;

taxable income on the basis of a tax year.

Its tax liability for 2009 or

•

Form 944, Employer’s ANNUAL

A tax year is the annual accounting period

Its prior year’s tax.

Federal Tax Return; or

an insurance company uses to keep its

See section 6655 for details and

•

Form 945, Annual Return of Withheld

records and report its income and

exceptions, including special rules for

Federal Income Tax.

expenses.

large corporations.

The trust fund recovery penalty may

Use Form 2220, Underpayment of

As a general rule under section 843,

be imposed on all persons who are

Estimated Tax by Corporations, to see if

the tax year for every insurance company

determined by the IRS to be responsible

the corporation owes a penalty and to

is the calendar year. However, if an

for collecting, accounting for, and paying

figure the amount of the penalty.

insurance company joins in the filing of a

over these taxes, and who acted willfully

Generally, the corporation does not have

consolidated return, it may adopt the tax

in not doing so. The penalty is equal to

year of the common parent corporation

to file this form because the IRS can

the full amount of the unpaid trust fund

even if that year is not a calendar year.

figure the amount of any penalty and bill

tax. See the Instructions for Form 720 or

the corporation for it. However, even if the

Pub. 15 (Circular E), for details, including

Rounding Off to Whole

corporation does not owe the penalty,

the definition of responsible persons.

complete and attach Form 2220 if:

Dollars

•

Other penalties. Other penalties can be

The annualized income or adjusted

imposed for negligence, substantial

seasonal installment method is used, or

The corporation can round off cents to

•

understatement of tax, reportable

The corporation is a large corporation

whole dollars on its return and schedules.

transaction understatements, and fraud.

computing its first required installment

If the corporation does round to whole

See sections 6662, 6662A, and 6663.

based on the prior year’s tax. See the

dollars, it must round all amounts. To

Instructions for Form 2220 for the

round, drop amounts under 50 cents and

Accounting Methods

definition of a large corporation.

increase amounts from 50 to 99 cents to

Also, see the instructions for line 15,

Figure taxable income using the method

the next dollar. For example, $1.39

Form 1120-PC.

of accounting regularly used in keeping

becomes $1 and $2.50 becomes $3.

-4-

Instructions for Form 1120-PC (2009)

Instructions For Form 1120-Pc - 2009 Page 4

Related Articles

Related forms

Related Categories